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Investment Opportunities Don't Stop at U.S. Border Edward Jones Investments Financial Focus

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Posted 05 October 2005 - 09:38 PM

Declare Your FinancialIndependamce
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Updated:October 7, 2005
InvestmentOpportunities Don't Stop at U.S. Border 

Did you ever stop toconsider where the everyday products you use come from? Whether you'rewatching television, talking on a cell phone, making coffee, driving acar, or performing dozens of other activities, you may be using goodsthat are manufactured outside the United States. As a consumer, you mayfind this mildly interesting. But as an investor, you've definitely gotsomething to think about.

Although the fates andfortunes of U.S. companies dominate the business news, many foreigncompanies are good investment possibilities. But how do you find them?And is there anything special you need to know about buying shares ofinternational stocks?

Actually, investing inforeign companies isn't really that difficult, as long as you keep afew things in mind:

·Know the risks involved. You canfind solid investment opportunities in strong foreign companies, butyou also have to be aware of some special risks. A variety of factors -including political instability, currency fluctuations, economicclimate, foreign taxes and differences in financial reporting standards- can affect your stock holdings. While you may not be able to predictthese events, you can at least factor them in when making yourinvestment decisions.

·Diversify. When you own U.S.stocks, you need to diversify - and diversification is no lessimportant when you invest internationally. That's why you may want toconsider investing in mutual funds that own a variety of foreignstocks. You can choose a global stock fund, which invests in stocks ofcompanies located around the world, including the United States, or youcan pick an international equity fund, which invests in securities ofcompanies located in developing markets outside the United States, suchas Japan, Western Europe, South America, etc. When it's time to choosea particular global or international mutual fund, don't just settle forthe first one you come across. Before you invest, compare a fund'smanagement experience, investment philosophy and total expenses withother global or international funds.

·Focus on a company's fundamentals.When you invest in any stock - U.S. or foreign - you need to take aclose look at the company's fundamentals. Is its management stable? Isthe company well- positioned within its industry? Is the industryitself growing? When you can answer these types of questions, you'll bein a good position to make an informed investment decision.

·Don't ``overweight'' your portfolio with foreign investments.Foreign investments can be a valuable part of your diversifiedinvestment portfolio - but they probably shouldn't make up too heavy apercentage of your overall holdings. Even if you've done your researchon foreign stocks, they will always represent more of an ``unknown''than U.S. stocks - and, in the investment world, the element of mysteryis rarely a good thing.

Finally, get help from anexperienced investment professional. He or she can help guide youthrough the international investment scene - and hopefully make yourjourney a pleasant one.

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